Unit economics can make or break a controlled-environment agriculture company. One Ottawa-based indoor ag is finding success — and good unit economics — by focusing on the needs of specific communities and use cases where the technology boost food security and lower costs.
Launched in 2016, Growcer manufactures Osiris, a containerized farm that is equipped with air filtration, climate controls, and other technologies to produce its food, leveraging a type of hydroponics called shallow water culture, Corey Ellis, CEO of Growcer, explained. Growcer is continuously improving its technology stack, whether that is new inoculants to boost nutrient intake or automation, he noted.
By focusing on regions where growing food indoors would be more cost advantageous than producing outdoors or importing, Growcer was able to develop favourable unit economics, the calculation of profit based on a single product. A lot of leafy greens in North America are produced in California, so importing to Alaska or Canada can be costly, he noted.
Additionally, Growcer found success by expanding beyond traditional agriculture channels to serve frontline communities, whether they are in universities, food banks, charities, or indigenous communities, Ellis said. The modular farms can also help educate people on careers in agriculture, with Canada facing many of the same labour challenges as the U.S., he added.
“The unit economics do not work everywhere,” he elaborated. “The right price, the right cost of energy, the right cost of labour, and no over-regulatory [burden creating] a bunch of costs — that tends to be a magic formula. And then, of course, last but not least, the right market of consumers that want to pay for a local product."
Growcer joins Mars Discovery District’s accelerator programme
Currently, Growcer is operating across the U.S., Canada, and the Caribbean and is working to expand its presence in areas prone to extreme temperatures and water scarcity and hurricane regions, Ellis explained.
Growcer was one of nine Canadian start-ups selected for the Mission from Mars: Food and Agtech accelerator programme, presented by Mars Discovery District and supported by Farm Credit Canada. Other agrifood start-ups include Arbia, Hydro Cool Systems, Knead Tech, PULR Technologies, Purchs, Relocalize, SoraLink, and Tewari De-Ox Systems.
“We want to be surrounded with people that are a lot smarter than us and that have been around the block, maybe in other areas, so not just ag tech, but industrial manufacturing, finance, and infrastructure, and all these things that are peripheral to our business,” Ellis elaborated.
He added, it “is always hard to find the right capital partners. We don’t have very many investors, but we do have banking relationships for working capital and inventory, and all these things that are really important to help a business like ours continue to grow.”
Building a business by shying away from venture capital
Growcer built its business all while being prudent in taking on external capital, having bootstrapped its business for the first seven years. In 2024, the company raised a $3 million Series A round, led by strategic investors Modern Niagara, Jeff Westeinde, and Jeff York, and former Farm Boy Co-CEO, following a seed round of mostly patient capital.
The company has grown its business organically and is using structured credit models, similar to real estate, to secure capital, Ellis explained.
“We set up essentially an asset fund, whereby we do have investors who have come together to buy a 100 farms, and then make them available for a rent-to-own model to customers. They may not want to use C$250,000 [or] $180,000 to buy a farm up front. They pay $3,000 a month, and ... they are earning equity in their farm.”
